More Fun with Higher-Ed Numbers: Financial Aid

Financial aid per student at Virginia’s public, four-year colleges is higher for out-of-state students than in-state. But given high out-of-state tuition, their need is greater.

Last month I published tables showing that public Virginia colleges and universities give considerably more financial aid per student to out-of-state students than in-state students. While acknowledging that out-of-state students pay higher tuition & fees and may have greater need for assistance, I raised the question, “Shouldn’t it be the other way around? Shouldn’t Virginia universities be giving more assistance to Virginia students?”

Nothing is ever as simple as it seems. Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV) invited me for a sit-down meeting to discuss the topic of financial aid with his staff experts. In light of what I learned, the story gets more complicated. I’m not sure the bottom line changes, but it’s always good to understand what goes into the data.

The figures I published last month represented “gross” financial aid provided by Virginia institutions from their own funds (not including federal grants and loans or private scholarships). But that “gross” number lumps together several types of assistance. It includes loans that students must repay (which, though helpful, is not as beneficial as a grant or scholarship). It includes work arrangements, in which students actually earn their aid. And it includes athletic scholarships and waivers for military personnel. In terms of impact, the latter two categories of aid are the most important.

As a rule, universities hand out athletic scholarships to recruit top talent regardless of where the athlete is from. “If you’re trying to get the best athletes, you’re residency blind,” says Lee Andes, SHEV’s assistant director for financial aid. Because out-of-state students pay higher tuition than in-state, an athletic scholarship for an out-of-state student is more valuable, and it inflates the numbers for out-of-state aid. But athletic scholarships are doled out by coaches, not admissions officers.

Also, federal law mandates that colleges across the country provide in-state tuition to military personnel, even if their official domicile is in another state. For accounting purposes, these tuition breaks are classified as “waivers,” and they are counted as out-of-state financial aid.

Let’s walk through the numbers step by step so you understand where they come from. First we have the Gross Cost of Attendance. This “sticker price” is usually what you see quoted. Here is the breakdown by public, four-year institutions for the Gross Cost of Attendance for one year:

Just as many auto buyers don’t pay the full asking prices, many college students don’t either. Here’s the annual Net Cost of Attendance at each institution after adjusting for institutional financial aid. (These are average numbers. Some students will pay the full freight and others will pay significantly less, generally based upon their financial need.)

For each table above, I have shown the Cost-of-Attendance gap between in-state and out-of-state students. You’ll notice that for most institutions, the gap is smaller after financial aid is taken into account. To the left, I show how much the gap shrinks. The only exception is James Madison University, for which the the gap increased modestly. While official tuition policies dramatically favor in-state students over out-of-state students, financial aid policies help even the score.

Even after financial aid, out-of-state students still pay a much higher tuition. (Everyone pays the same for fees, room and board.) When we focus on just this aspect of the Cost of Attendance, says Tod Massa, policy researcher, we can see that out-of-state students pay anywhere between three and seven times more than their in-state counterparts.

However, some legislators aren’t terribly concerned about out-of-state students. They feel responsible to constituents who are complaining about the ever-rising cost of college. These lawmakers look at the numbers and wonder why financial aid can’t be used to make tuition for affordable for Virginia students. After all, the state system of higher education was set up for their benefit, not the benefit of out-of-staters. That raises a host of new questions, which I shall address in the next post.

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